3 shares to hold for 5 years

The best thing to do in investing is give your shares time to grow.

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Giving your share portfolio time to grow is one of the best ways to ensure market-beating returns and get through market volatility.

Here are three shares you could buy (at the right price) and hold for the next five years:

Xero FPO NZX (ASX: XRO)

This cloud accounting software company is no longer a small upstart trying to revolutionise the industry. It is now a juggernaut with over a million subscribers.

The efficiencies and cool features it offers business owners and accountants alike make it a very attractive proposition for the price it charges.

The share price has performed strongly in 2017 thanks to impressive growth in the UK market. The share price of $30.46 could have a lot further to run as it keeps getting more subscribers.

Xero isn't yet making a profit or paying a dividend.

CSL Limited (ASX: CSL)

CSL is Australia's healthcare giant with a thirst for more growth. The business has grown into a huge global business with its large operations in plasma products, research & development and immunisations.

Health is only going to become a more critical industry to society as the population ages and unknown health issues develop.

CSL is currently trading at 31x FY18's estimated earnings with an unfranked dividend yield of 1.24%.

Challenger Ltd (ASX: CGF)

Challenger is Australia's leading annuity provider and is growing at a good rate thanks to the growing retirement population and superannuation pool.

It recently released its Q1 results that showed total life sales had grown by 45% on the prior corresponding period and group assets under management (AUM) had grown by 5% over the quarter.

I think Challenger is the best finance stock on the ASX and is well worth a closer look. It's currently trading at 20x FY18's estimated earnings with a grossed-up dividend yield of 3.62%.

Foolish takeaway

I'd be happy to hold all three shares for the next five years if the ASX were to shut tomorrow. However, quality doesn't come cheap and all of them are trading more expensively than normal.

At the current prices I would choose Challenger because of its lower price/earnings ratio and higher dividend yield.

Motley Fool contributor Tristan Harrison owns shares of Challenger Limited. The Motley Fool Australia owns shares of Challenger Limited and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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